NCTA, IAB: Court Should Force FTC’s Hand in Subscription Rule Lawsuit

The FTC is breaking the law by refusing to follow statutory mandates that would allow consolidation of lawsuits against the agency’s new click-to-cancel rule, said NCTA, the Interactive Advertising Bureau and the Electronic Security Association in a filing this week (see 2410240001).

NCTA, IAB and ESA filed one of four lawsuits against the FTC’s Negative Option Rule, which regulates industry practices surrounding automatic subscription renewals. The FCC recently issued a notice of inquiry examining click-to-cancel requirements for cable, broadband, satellite TV and voice services (see 2410230036).

NCTA, IAB and ESA on Tuesday filed a mandamus petition asking the 5th U.S. Circuit Court of Appeals to force the FTC to follow statutory requirements for sending the lawsuits to the Judicial Panel on Multidistrict Litigation (JPML) for consolidation. The associations say members are incurring compliance costs that should be put on hold while a federal court decides whether the agency has the authority to issue the rule.

The FTC didn’t comment Thursday. NCTA declined comment beyond the filing. ESA didn’t comment.

FTC Chair Lina Khan, when announcing the rule, said it would help stop companies from making consumers “jump through endless hoops just to cancel a subscription. ... Nobody should be stuck paying for a service they no longer want.” FCC Chairwoman Jessica Rosenworcel said in October her agency receives hundreds of thousands of consumer complaints annually, with many raising issues centered on canceling service, unexpected charges and unexplained outages.

The FTC believes it doesn’t need to send the petitions to the JPML until after the final rule has been published in the Federal Register, the associations claimed in Tuesday’s filing. The FTC’s rule technically won’t go into effect until 60 days after FR publication.

The filing claims the associations were required to challenge the rule within 10 days of its “issuance,” which they say occurred on Oct. 16, when the FTC announced finalization. The commission has a statutory duty to “promptly” send the petitions to the JPML at the close of the 10-day window, which ended Oct. 28, the filing said.

There’s no case law supporting the FTC’s interpretation of deadlines, IAB Executive Vice President Lartease Tiffith said in an interview. The associations are seeking prompt judicial review of the rule to avoid further compliance costs.

Tiffith said the FTC was politically motivated in rushing the rule in order to finalize it before Tuesday’s election. The agency ignored governmental norms by issuing a major, divisive rule within a month of a presidential election, he said: “Normally agencies do not issue major rules within a month's window of a presidential election. That again just shows you that they don’t care.”

The FTC and the FCC on Wednesday received letters from House Commerce Committee Chair Cathy McMorris Rodgers, R-Wash., asking that the agencies suspend working on controversial matters during the transition from President Joe Biden to President-elect Donald Trump (see 2411060043).

In addition to the lawsuit from NCTA, IAB and ESA, the U.S. Chamber of Commerce and the Georgia Chamber of Commerce filed a suit with the 11th U.S. Circuit Court of Appeals. The National Federation of Independent Business and the Michigan Press Association filed a lawsuit with the 6th U.S. Circuit Court of Appeals. Custom Alarm filed a lawsuit with the 8th U.S. Circuit Court of Appeals Oct. 22.